when you are reported as saying very forcefully that you had done nothing wrong. we have a copy with the. why did you resign bearing in mind the fact that you were on this case? >> thank you for those kind words. i said in my statement that this has become a huge distraction the same with the commissioner described it. a huge distraction -- i looked at the last two weeks, probably spend two or three hours managing that. no indication at any time for some considerable period that that pressure -- one huge distraction. and to be candid i said and accountable for what has taken

place on my watch and ice and lee believe ahead done nothing wrong. my integrity is intact. my conscience is clear. but it is time -- announced intention to resign. >> two issues. one that came to evidence. obviously -- could i start with some interesting evidence concerning mr. wallace? in the public domain and one of the reasons you felt there were allegations swirling around that caused you to be distracted that he decided to implore you, mr. wallace, that he went to you and he was someone -- basically due

diligence. having conducted investigation into the news of the world, you decide these matters and as a result of what you said to him, let go have a copy for you because it has not been written down but i can send the transcript. that is why he took it on. if you raised any concerns whatsoever, and -- what do you say to that? [talking over each other] >> to put it mildly -- i did what i considered due diligence. i sought assurances from mr. wallis to the effect that i got a note, is there anything that nick davis is still chasing, you or me or the commissioner and i

received credible assurances -- categorical assurances. that is not due diligence. that is lessening of the contract. i had nothing to do with that or the process. that was a matter for mr fedorcio. it was the conversation, i made a record of it. a very short record. i was happy to report that and that was it. that is not due diligence and certainly not recommendation. several occasions in the past five years. i wouldn't touch it or go anywhere near it. >> you have not seen what he said or heard what he said but he was pretty emphatic that he relied on your integrity and that is why mr. wallis -- even

at the slightest concern, he left with the impression that mr. wallis did not have his contract. >> not much of the concern 2009. [talking over each other] >> i didn't write anything because i didn't have that in 2009 and with respect to the public domain which is deployment of mr. wallis's daughter. did you have anything to do with that? >> i am happy to talk about this because i am happy to be completely open. i have done nothing wrong. i was at postbox from mr. wallis's daughter from information noted and very happy to give the committee that e-mail which is completely equivocal interest in whether she gets employment or not. passed on that e-mail to the directors and thereafter i don't

know what happens. >> it happens all the time. members of parliament employed friends, family, it is just -- in january of 2009, a very good point, this operation had nothing to do -- simply to the postbox. >> you categorically denied to this committee that you secured this job? >> categorically deny and the facts speak for themselves. i have even said in the e-mail please let me know what the position is so i can manage it. completely equivocal ready individual gets that point. we have massive -- that is what we did.

i had absolutely nothing to do with her employment. i was simply a post office there. >> your name came up a few times. you were close friends. is that right? >> i became friends with him. it was 1998. it was in 2000. i met him once. i must have met him the next five or six years two or three times year mostly -- occasionally on our own. i would say we had some thought because -- i do not go around to his house on a regular basis to pick him up to go to football. it is mostly with other people.

i would see him two or three times a year. he is a friend. i can't be clear. if -- [talking over each other] >> he is a friend of yours. so don't get the impression that we're living in each other's houses because that is not case. [talking over each other] >> what you just said about employment practices. you said it happens all the time. does it really happen all the time? this passes to the director. an organization like this surely has procedures -- [talking over each other] >> telling this committee that you didn't think that it would make any difference? >> if he knew, you would know

that he would absolutely say if there was anything improper about this, and he said so, he would have approached the process. he was that sort of person. i know in talking to their individual than the matter will be dealt with with complete privacy and a proper way. the metropolitan police turns over a huge amount and want to see -- it is quite a useful way of getting people into your employment on a short-term basis. numerous people within the metropolitan community and -- people who are known to those people had been employed on a short-term basis and some of these became employees in the future so it is not unusual. >> is that with the public ought to be behaving? >> you just decide the regular way of getting people in. what about the people who don't do that?

>> we are turning over -- there are normal processes that happen. it happens in the house of commons that you bring people to work for you for short periods on a regular basis. [talking over each other] >> can i ask about his non disclosure to the prime minister about the contract that mr. wallis had. he researched number 10 saying to you or you saying to the prime minister, should be protected from this information. who is this official who wanted everyone to keep this information away from the prime minister? who was trying to protect the prime minister? >> officials are always trying to protect their principles. there are very rare occasions

when the prime minister will agree to that operational method of counter-terrorism. >> the decision not to tell us about it. >> there was an offer in the early part of september of 2010 for me to put into context some of the nuances around this language in terms of what an assessment is and things like that. and also officials in number 10 to say should that be desirable i am prepared to do it. >> who is the official? >> the chief of staff. >> to brief him full week? [talking over each other] >> are offered to brief on the nuances, it was a new york times issue.

it is not well understood around these nuances. it was simply an offer to explain what scope he meant. >> what happened to the offer? >> it was understandably rejected. >> not telling the prime minister for operational -- >> i wouldn't have told -- wouldn't have disclosed and the operation about this. very rare occasion would be briefed on operation and it would be something catastrophic for national security, it wasn't at that stage. it was an offer to explain -- >> you didn't seek to tell the mayor of london there was somebody -- who you knew has a close friend or whatever. who was formally the new --

"news of the world". >> it would be my place to do it. he was working predominately for the reasons i know we explained to you. some brief support for me as well. why would i -- take my responsibility to brief -- >> >> the previous witness, mr fedorcio, we asked him in effect if questions were asked about mr. wallis the good points have been made. he said no because in effect this had all been cleared by you. >> hopefully my earlier answer

explained it. wants we got into -- once we got into the procurement process there was a clear process going. there was proper due diligence as opposed to personal assurances then there was nothing untoward and let's not forget mr. wallis -- we don't know what comes in the future. but keep in mind i will provide -- it was a simple contemporaneously note to say record of that conversation, it is simple. >> what it seems to me is phone hacking has been used in the investigation taking place. you decided in 2009 about the certification. and my right? >> in 2009 i didn't reopen the

investigation. >> you describe it to a newspaper has a crack investigation. >> are used the word decision in the light -- >> yet in -- [talking over each other] >> in the light of what i now know, fa had known then what i know now and the fact is the news international was deliberately covered up by would have made a different decision and none of us would be where we are today. >> two people have been in prison prior to 2009 for phone hacking and "news of the world" was very much in vogue news as far as tracking information as a result of phone hacking. now the "news of the world"

should be taken off in 2009 when you decided -- wouldn't the first question be were you involved in any way? >> i appreciate it looks odd now. i confidently predict as a result of news international a small number of police officers will go to prison for corruption. so simply no evidence against mr. wallis at that point in 2009. the investigation had been carried out by others and it was thought to have been a success at that time. in july of 2009 it was suggested, anything else, you say it was the huge story but it wasn't. it re-emerged with the new york times in 2010 but it is another

of those stories that gets -- >> would we be right to come to the conclusion that no questions were asked by you to mr. wallis about phone hacking at the time of the "news of the world"? >> he was never a suspect. >> weren't year recommended -- did you ask him whether he was involved in a phone hacking? >> i sought assurances whether he had anything to embarrass him. [talking over each other] >> mr. wallis's potential contact with the metropolitan post, it was a bank holidays or don't recall, wanted absolute assurance there was nothing in the previous the phone hacking message being reported that could embarrass him or me or the

commissioner, categorical assurances. >> the prime minister's chief of staff about the offer that you talk about? >> my discussion in a brief e-mail exchange, for whatever reason in this process, the prime minister wanted to discuss the issue, it is very simple. i can understand it. >> at any point looking for the prime minister, you had discussions -- >> i had met him. >> and mr. wallis? >> no. >> thank you. stephen mccabe.

>> was he a friend of yours? and he had been -- where these were coming from? >> perfect that are worked out in retrospect the phone hacking i haven't actually. >> you never did? what you said in that e-mail, quote, have you spoken to mr. coulson since he was employed by mr. cameron? >> i have that at number 10. >> thank you. >> it was probably relatively early on. number two or three. >> about these matters? >> the counter-terrorism about police reform and all those matters that i ought to be interested in.

>> have you spoken with mr. wallis before you did that? >> yes. but not about anything -- [talking over each other] >> the evidence you gave to as you mentioned when you did see the review in 2009 you felt that you were doing the minimum -- you had given the terror alerts at the time. can i ask whether you got that sense from the instructions that came from before? >> can i take you back to the evidence from the exchange? you interrupted my flow. i did start saying there's an element of that. i reiterate the point there has

not been any new evidence. if i had seen any during the course, we may have reopened the investigation depending on the level of quality of the packing. doing the minimum has been taken out of context. i did qualify and did it separately. i didn't get the full point. it is clear from the transcript that is what are was going to say. >> what you were saying from the instructions is what sort of attitude did you approach with? give it high priority or that you should be critical when you get it done in the timeframe that is laid out for giving the press and announcement later that day? >> there was no time for that. >> you had to make a statement that day. >> a complete statement.

absolutely no time frame. it was as long or short as it had to be. i wrote myself a contemporaneous note that they. simply some principles to be adopted in operation carryout and requests to establish the fact -- what approach i should adopt specifically -- this is not a review. study the effect around this case and consider if -- i intend to adopt the following principles and i outlined eight principles. the scale, scope and outcome of this case, consideration of have the advice they provided. consideration of the prosecution team and their focus on a framework of the case and any complexity around the evidence

and the ability of the state to go up to 12 months. the level of disclosure reviewing the material at that point. how the tape was opened after the guilty plea and if there is anything new or additional in terms of the guardian and finally out they were managed and the impact of any urgent cries from the statement. so i went through that process. so i accepted it everywhere i can. that is the approach i took. and don't fancy it. actually sophisticated. [talking over each other] >> there were a large number of principles there, the way they relate to 11,000 documents which

you admit were not -- >> the level of disclosure, had tried to take view in terms of people have gone to prison. >> 12,000 victims right now and only 12 have been identified? >> the material has been reviewed by counsel. in terms of relevance, accept that but i received it a day later to reaffirm that they have seen all the material and anything else. you can criticize with hindsight but it was not -- a reasonably sophisticated process to go through around an article in the newspaper in which there was nothing new. >> but it was your decision that you were going through this. was not on instruction from the

court. was your design entirely. [talking over each other] >> we had this report. we didn't hear from the committee. he was putting you on with no pressure. he did say he valued your integrity. >> 30 years experience in the world -- i have done any number of reviews and establishing the facts. he would expect me to adopt the process that was resilience and reasonably sophisticated. for what we were asked to do that they. this was an article in a newspaper. >> thank you. >> to explain when we started our inquiry in september, cps constrained the investigation.

later in july of 2009 when you said just now that the fact you considered, you didn't go to that. but at that time the cps took the committee to prove the criminal offense of interception the prosecution must prove the actual message was intercepted prior to being accessed by the intended recipient. in light of that do you think there was blame between the police and cps? >> no i don't. it is apparent throughout that we have the clearest possible -- that permeates the inquiry. we have written to you on it. i have been bashing by head against the wall. absolutely clear what advice we

got. anyone who says the police investigation never lived in the real world, what we did and how we conducted the investigation now and in the future. >> we have a former dpt, you will be off before then by the way. >> thank you very much. >> we love seeing you, mr. yates. >> you refer to police technology being misunderstood and helped as in relation to the word review the last time we spoke. there is new evidence that has come up again and again. you were asked by the commissioners to look at the available material. and in your letters to the chairman you said this resulted in asking senior investigating

officers if there was any new information that might require investigation from the new york times. i just want to be clear about this because there may be misunderstandings. in the general public mind we thought there was instruction being given to look at the material available to see if there was anything that shows their to the offenses by other people and if there were victims that were affected other than those who were already identified. is that general public and parliamentary impression? >> not quite clear on the question. >> in everyday parlance we all pause at earlier stagess of the

inquiry, get back to looking at all of this and see if there's anything else the uncovered, as broad as that. and therefore anything that was spun toward and could be pursued in a way that could lead toward prosecution should be investigated. >> in terms of looking at what is new or what would merit what we knew in 2009, what would merit that, what would be my level of concern that there is something we have seen, the case that has been to the court and reviewed by counsel and prosecuted. >> but nothing that would say -- in hindsight, really -- [talking over each other] >> just trying to get to the nature of the decision,

apparently narrow focus because we pursue individuals -- [talking over each other] >> at the time when you were out side the commissioner -- let's not use the word review, or misunderstanding. did you task the office to do this to look at that and see if there's anything there or was this a narrow look? >> it was a fresh look at the guardian article. it was in 2005. [talking over each other] >> wider than that in terms of seeing if there was anything there. what we knew then. >> i have been before numerous committees. our wish it had been different.

>> understood. you would accept many people tell us there's something around and it ought to be brought out into the open somehow. but what you can ask was a narrow focus. is that correct? >> absolutely right. on a weekly basis, very interesting article in journalism which we don't want investigation all about it. we do anything regarding this p

>> i became involved in the cas. it's been subject to numerous investigations, reinvestigation. my involvement is about 2005,

roughly 2006 onwards. huge inquiry, like 750,000 documents come to light. i wouldn't know. >> cut to the chase. the point was that officers were investigating the murder was himself placed under investigation by the "news of the world." some links allegedly who have interest in the case? >> i'm fully aware of the interest around date code surveillance and all those issues. i'm also aware, there was a meeting back in the yard i think between rebekah brooks, where these matters were discussed. i don't know the outcome of that and i wasn't responsible for the case at the time. >> dgc to find out why this was under investigation by "news of the world"? >> say it again. >> did you try to find out why

that officer had been investigated by the "news of the world" at that time? >> no, i didn't. i wasn't responsible for the case. >> you became interested later on. i'm not blaming you. [inaudible] >> good lord. the thing that concerned me and what i discuss with dave cook was personal security. that's what would have concerned me. david would know, we put in place positions for reassurance around his personal security. what happened in 2002, i would not be taking further at that point. >> you didn't see to investigate why his place under investigation by the "news of the world"? >> i suspect it was common knowledge between david and i had taken place and i put in place with david very personal security matters, and relevant

advice to assure that he felt comfortable doing his job. >> it was the time he was investigating the particular case that he had come under investigation. he was investigating the daniel morgan case. he launched the investigation. when that happened he was placed under investigation. do you know why that have been? >> i don't know why that happen. it was 2000 i wasn't responsible. >> thank you for that line of questioning. >> can we just come back to a couple of things, please. some things you completed this afternoon and it was effectively news international who was not cooperating that causes us to be where we are here. you except wrongdoers often do not cooperate with the police? >> absolutely except that. >> do you rely on the fact they were not cooperating to blame them for where you are now? >> on numerous occasions, i have tried to explain to this

committee that issues around production. i have letters from news international in 2005, 2006, 2009 where they clearly with legal advice have constructed supplies to letters that absolutely constrained the please ability to get their production in order. i'm afraid to me have to listen to me. it is absolutely clear, absolutely clear i cannot -- we prepared a production letter in 2005. the investigation team did. we were told by the legal people, you simply cannot take that or a judge will not accept it. >> they didn't have enough evidence, mr. yates. i hear what you are saying [talking over each other] >> the point is, is they are seen to cooperate and you haven't that evidence they're not cooperating, you cannot get a production order. >> a business does not have to open its doors to the please

without good cause. you say they constructed legal audience to impede you but the reality is you should have evidence that he wouldn't have needed legal arguments to deconstruct. you would've been able to get search warrant and have 11,000 pages of evidence with scotland yard. >> the news international letters demonstrates that they are cooperating with police inquiries, and have evidence and there was evidence they were cooperating because they were providing. unless you contrary evidence that they were deliberately obstructing you in anyway, you cannot get a production lawyer. there's lawyers at this table i know who will reiterate that. you cannot get evidence, and i'm one of them. >> the reality is you are seeking to blame the legal process for something that is actually the metropolitan police fault, isn't? >> completely disagree with your. >> can i ask you this quick do

you know who first recommended mr. wallis to mr. fedorcio? >> i don't know that. >> you didn't make inquiries about that when you were asked? [inaudible] >> did you make inquiries about mr. wallis? wallis? at all from a mr. fedorcio? deana who recommended him speakers i do not recall how it came in this process in terms of who else on the list was responsible for producing the tendering process. i'm sure he said that. i was aware, presumably before 31st of august, 29, that neil wallis was one of those which is why i saw their assurances. >> been how he came to be one? >> i don't appear. >> you didn't suggest the name?

>> that could well happen. it wouldn't have been speeded you didn't suggest you think? >> i can't recall. [talking over each other] he would have been one of them, you know, i can't recall the process but he was certainly because he was a guy that recently left his employment. is just the type of advisor we wanted them. so it's perfectly possible, yes. >> the job for mr. wallis' daughter, you say you -- >> i'm happy to provide enough on that. >> how many times? >> probably, to -- probably two, three, four spirit of your entire career? [inaudible] probably twice a year. probably twice a year. spent so wasn't a particularly

busy pressbox. i'm talking about you referring a potential employee to the head of human resources. >> yeah. >> you found that to be appropriate? >> well, i was aware that the head of human resources was seeking short-term placements. i simply forwarded a cd and i've nothing to do there after. >> thank you. >> thank you. sorry, do you say absolutely? >> i did not. right. mark reckless and then bridget philipson and then we will close. >> i think i understand your point about production orders. i suspect details, i'm going to have to show -- state on the right side of the line. but i think mr. ellis' point is

didn't have 11,000 pages documents, if you come through those and perhaps journalists might not that have allowed you to get a production order? >> as i said i was responsible in 2005, six, and those who came to the committee, they allegedly didn't do. i can't answer that point. >> or you i meant -- >> bridget philipson. >> the point about the mole care? in the prosecution is a known fact that is to introduce had listened to voice no messages prior to others listen to the voice mail message the? those that we could prove and whip into the sort of process of how you prove it, the access prior to the intended recipients

listening to it. there were cases, yes. but as i think i've said to this committee, excuse me if i'm confused, there was only one place we could prove on a technical basis, others had to be proved through a mixture of other techniques to satisfy a court that it's been listened to prior to being accessed. that's what happened. >> so people in this case whose voice no seven listen to? >> yes. >> thank you. >> nicola blackwood? >> give me a chance to clarify comments made by mr. fedorcio in the light of newspaper reports about friendship with mr. wallis, as they been overstated. we were surprised to hear hit come to ask you, he said the reason for that was because you have been involved in hacking and had some expertise perhaps in the problems which might

arise. we then asked him did you not disclose the fact that you're a friend of mr. wallis, inhabit a friend since 1998. and mr. fedorcio didn't seem to want to answer that. and advice that he did not know. and i just wonder what your response would be, as i think would be helpful for the committee to know exactly what you told mr. fedorcio in that conversation when you agreed? >> let me take it in stages. firstly, i think i've explained to the committee, i'm not his own people, but the level of content, the level of friendship is nothing like described today. in the observer as it was then. i am pretty surprised that dick wouldn't have known i neil

wallis in that sense. but i can't speak, i can't speak for him. so, you know, i would absolutely nothing to hide around this. i've said so on several occasions. so, i have confidence in what i'm saying is absolutely the truth, and it's -- unit, you described it as due diligence. it was just seeking assurances to due diligence is something the press would do. >> if there was additional do didn't -- due diligence? >> i don't know. >> so because he believed that there was an additional process, he didn't feel it necessary to say because i'm a friend, or even an acquaintance of this individual, i might be too close to this and it would be inappropriate for him to do that?

>> i wasn't doing due diligence in the sense of the formal sense. i was just seeking assurances. let me be clear. it was not due diligence to be accepted for the then she do due diligence. [inaudible] the prime minister had appointed someone who used to work for "news of the world," there was no reason why he shouldn't have, do you agree with that statement? >> i have nothing to disagree with it. it doesn't give us a level, in the level of assurance, different than the prime minister had. i'm not really sure it's relevant in terms of, we are, we're responsible, the parliament is responsible for this country. we are responsible for investigations. i think if they can give you some comfort in that sense. can i just pick up two final points quick you said in your evidence you are confident that

you can't predict police officers would go to present in respect to these matters. >> if the corruption cases which respect for a small, very few in number, probably investigated, i have no doubt they will go to prison step when did you come to that you've? >> i come to the view, if you put a level of investigative expertise and resources around these issues then you tend to get the results. spent the next point is about the beanbags which you mention mentioned. what is the rule about the disruption -- destruction of evidence, how many is the so please hold evidence before they destroy? the last time they were looked at before you put on the database was in 2006. i understand there's a six-year rules. >> it depends.

i think it is six, seven years. i would have to check. >> you didn't see them yourself but you understood they were around, is that right? >> yes. >> finally on operation weeting. which is progressing. are you being kept informed of what is happening in operation weeting up until the time your resignation of course? for example, did you know that rebekah brooks is going to be arrested on sunday? >> no. i don't operation weeting complete firewall or on what they're doing. i know nothing of the developments or next developments. >> and what about your future, you have now resigned, no plans to take out journalism as mr. heyman has taken up? [laughter] >> what about "the guardian"? [laughter] on a serious point i have expressed regrets that more wasn't done about those potentially affected in 2005, six and 2009.

i've paid a heavy price for it announcing my intention to sign but i am accountable for what took place. i think we have also must remember that it is not the place that have failed here in every respect. it is me the international failed to bite us as they should have provided us in 2005-6. i yesterday said i was accountable, and i need to be accounted. i have done that. i think it's time for others to face up to the response does and do likewise. >> and who do you mean by that? >> i think it is very clear. news international. >> and since you discovered what's been going on, you've obviously have contact with news international in one way or the other. social or mean or whatever. d. make this point that when you see, do you tell them if you cooperated more we --

>> i don't discuss these matters with news international spare but you do think news international should take the responsibility that you and supporters take? >> i absolutely do. >> which means really nation -- >> it's a matter for them spent cannot on behalf of this committee, despite the last time you're appearing before us in your present -- >> is that a promise? [laughter] cannot place america the appreciation to you for the way in which you always approached these sessions? you've always been most cooperative. even richer, that short notice. every one of the commentators, the home secretary and the prime minister have mentioned your work on counterterrorism which i know is your main interest on the work you did in respect, which i think your particularly proud of. and may i on behalf of the committee which is the best of luck.

>> thank you. >> thank you very much. order, order. the committee will meet again at 5:30. could ask the committee to stay behind. >> british prime minister david cameron requested i won the extension of this session of parliament so he could make a statement and hold a debate on the phone hacking in the house of commons tomorrow. we will have live coverage of the c-span networks.

>> with negotiations ongoing between the white house and congressional leaders are raising the debt ceiling and the budget, oklahoma republican

sarah tom coburn yesterday unveiled his own plan to cut the deficit by $9 trillion over the next decade. we will watch as much of this as we can and tell our live coverage of the senate at 10:00 eastern. >> good afternoon. thank you for being here. let me first of all thank my staff who worked thousands of hours the last six weeks to accumulate, sift through every agency and every program. you will see in this report detail like you have never seen. this is a plan, not the only plan but it is the only plan that will put our country back on the track a needs to be on. it's specific, detailed. it makes hard choices, and it is rough. but it's necessary.

the american people are tired of watching and waiting until the last minute to avoid a crisis. when it's a crisis that washington itself created. the crisis vote is not the death. north a deadline. the crisis is congress' refusal to make hard choices. and reduce the debt that has become our nation's greatest national security threats. doing nothing is a tax increase. of benefit cuts for seniors and the poor and of the core values of both parties. $9 trillion is very reasonable. that sounds idiotic to washington. but with this 9 trillion, the government will still grow since 2001, 63%. $1 trillion in defense cuts is reasonable. the threat of borrowing time is

the greater threat of conflict and china. on taxes let me remind my republican friends what barry goldwater once said. where it is the politician has not promised his constituents to fight to the death to lower taxes and has not proceeded then to vote for the very same spending programs that make tax cuts possible? there's some the shoe fits but not many. we need to cut spending inside as well as spending outside. this plan offers the american people 9 trillion reasons to stop making excuses and start solving the problems in washington. we have no doubt both parties will criticize portions of this plan, and i welcome that debate. but it's neither a legitimate criticism and tell you have a plan of your own, a plan that solves the problems of the

future, that secures prosperity for our kids and our grandkids. it's time to show the american people it's not only what is possible but also what is necessary. what is not acceptable, however, is not having a plan and delaying until some perfect political moment that will never arrive. the fact is doing nothing is a tax increase. i benefit cuts for seniors and the poor. the american people, congress is like a guy who has six credit cards and is going to get the seventh one so he can make the minimum payments on the other six. the problem is we're not going to have that option anymore, and neither will we. the question that all the rating agencies are asking, not just when you raise the debt limit, will you identify and recognize the fundamental reforms that are necessary to put you on the path where your debt is good. raising the debt limit will save

us. fixing our country and our spending will. both these sides are telling the country what they think they want to hear, but very few are actually telling them the truth. the scope of what i am suggesting is bold, necessary and reasonable. we are cutting fat, not muscle or bone. we can easily take several inches from our waistline. we are going to reduce this plan offers to reduce the size of the government 20%. 9 trillion out of order five, 46 trillion over the next 10 years. the defense section, and i shall smart cuts in limiting lower priority function of government programs will leave our military better prepared to meet potential threats. $1 trillion of savings will put the pentagon act at the same level at the height of the iraq surge, the same level.

with social security the program has made solvent. those on the lowest end get a bump. they are held harmless below 40% we take from the actually size to finish the final numbers, people under 55% on the curve will be held absolutely harmless. health care, we extend the solvency. we got $10 trillion of the unfunded liabilities. we have a 10 year doc fix. we emphasize reinvestment. not everything is cut, somethings are increased in this plan, like medical research for drugs, the nih. there's a debate about taxes going on, and we propose eliminating $1 trillion of wasteful tax spending. people who call this a tax increase art defending earmarks for ethanol, earmarks for movie

producers, eskimo whaling taxes and deductions for vacation homes at a time when we are near bankruptcy. called this plan attacks increase it ignores the massive amount of waste that we have identified. it cut spending outside the tax code versus inside the tax code by 7.5 to win. for some groups, ration of 1000 to one would not fit. in the real world a tax increase is any government policy that takes away your wealth. that's exactly what's getting rid to happen in our country. the assets that you have will be diminished in value as the government creates fiat money to pay for spending. tax expenditures are not tax cuts. tax expenditures are socialism and corporate welfarism. tax expenditures are increases on anyone who does not receive the benefit or can't hire a

lobbyist or special interest group to manipulate the code for their favor. politicians love to play the tax code because it benefits the politicians. no conservative should support washington seeking winners and losers during the tax code. who do we want deciding this? markets or politicians? it's fine to talk tough on taxes but if you don't have a plan to right the ship, then you have no legitimate authority to even discuss the subject. i'm strongly opposed to tax rate increases and i will fights and. they are not necessary for us to write our ship and create jobs. this plan is not about what we are cutting or recommending to be cut. it's about what we are left with. a social security and health care system that works and are no longer on the verge of bankruptcy, and a fairer tax code and a much more efficient government. this is 600 some odd pages, over

3000 references. my hope is that the people who look at this won't just take it and finish but if you will really read it so you get a searchable format, you can look at every area, you can see the backup, you can see footnotes, you can see the reference. this is a compilation of recommendations of cbo, of the oig, of gao and the obama administration. and with that i will take your questions. let me make one other announcement. we are releasing today and oklahoma waste report. it's easy for me to be critical of the federal government without being critical of my own state. here's the things we're going to show that iraq they are going on with federal money in my state. and with that i will take your questions. >> how widely have you floated your plan? what type of reactions have you gotten from the leaders on both

sides, the rank-and-file on both sides, both chambers in the house and senate? >> i have uploaded to settle. the only person is a copy of this is michael bennett from colorado because he expressed an interest in being involved. he was interested in seeing what we're doing. this hasn't been discussed. the fact is if washington is broken -- america knows how to do this. it's always the politicians that don't know. >> we will be this program not as as the senate is coming in. at noon today the senate will resume consideration of the va appropriations bill. right now for two hours they'll be in a period of morning business. the senate will recess from 12:30 p.m. until 2:15 p.m. eastern for their weekly party lunches. live coverage of the senate always here on c-span2. the chaplain: let us pray. eternal lord god, our inability to solve our problems

persistently reminds us of our need manifest your power on capitol hill, doing for our lawmakers what they can't do for themselves. break down the barriers that seem impenetrable, enabling them to walk by your spirit toward the accomplishment of goals that will bless and protect america. lord, divert them from the strategies that lead to dead ends, guiding them toward unity and consensus. shine forth with your power

during this challenging season. we pray in your mighty name. amen. the presiding officer: please join me in reciting the pledge of al legiance to the flag. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington d.c., july 19, 2011. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable jeanne shaheen, a senator from the state of new hampshire, to perform the duties of the chair. signed: daniel k. inouye, president pro tempore.

the presiding officer: the majority leader. mr. reid: following leader remarks the senate will be in a period of morning business for up to two hours with the two sides alternating 30-minute blocks with the republicans controlling the first block. following that morning business the senate will resume consideration of h.r. 205, the military construction bill. the senate will recess from 12:30 to 2:15 today for caucus luncheons. we continue to work on amendments to the military construction appropriations bill. we hope to complete that bill within the next day.

i note the absence of a quorum. the presiding officer: the clerk will call the roll. # quorum call:

mr. mcconnell: madam president? the presiding officer: the republican leader. mr. mcconnell: are we in a quorum call? the presiding officer: we are. mr. mcconnell: i ask unanimous consent that further proceedings under the quorum call be dispensed with. the presiding officer: without objection. mr. mcconnell: madam president, today members of the house of representatives will have a chance to stand up and be counted. they'll show with their votes whether they believe in freezing washington's current spending habits in place and raising job-killing taxes or whether they believe, as i do, that the reckless spending and debt of the past two years has brought us to this point of crisis and that something serious must be done to rein it in without damaging a fragile economy with job-killing taxes. frankly, it's that simple. those who support cut, cap and balance that the house takes up today will be voting for getting our fiscal house in order and

against an unsustainable status quo. and those of us who have been calling for serious short- and long-term action to cut spending, rein in our debt and preserve entitlements congratulate those who support it. we look forward to voting on the same legislation here in the senate soon. and before we do, it's important to remember how far we've come in this debate. just a few months ago the president's primary goal was to raise the debt limit without any spending cuts or long-term fiscal reforms at all. nothing but more debt. now he's claiming not only to support cuts but a proposal that he likes to call a big deal. anyone who's looked at the figures knows that it isn't. but the larger point here is that the american people have already won this debate. no one, not even the president, can claim to support the status quo anymore, even when in fact he does. but of course winning the debate

isn't nearly as important as achieving the reforms that are needed to convince the world that we're actually serious about getting our fiscal house in order. that's why republicans continue to hold out for significant reforms and that's why we'll continue to fight for serious long-term reforms this week. republicans have tried to persuade the president of the need for a serious course correction, but weeks of negotiations have shown that his commitment to big government is simply too great to lead to the kind of long-term reforms we need to put us on a path to both balance and economic growth. so we've decideed to bring our case to the american people. the president recently cited a poll that suggests americans want to see balance in this debate. i'd point him to another poll showing nearly two out of three americans want a balanced budget. that's what republicans are

fighting for. today republicans in the house will vote on legislation that cuts government spending now, caps it in the future to the average of the last 40 years and which will only allow for a raising of the debt limit if it's accompanied by a constitutional amendment to balance the federal budget. cut, cap and balance is the kind of tough legislation washington needs and that americans want. and republicans will spend the week trying to convince democrats to join us in supporting it. every single republican in the senate supports a balanced budget amendment. all we need is 20 democrats to join us in supporting this commonsense legislation. now at least 23 of our friends on the other side have said or suggested they support the idea and told their constituents that they'll lead on the issue. we think they should have an opportunity to follow through on

their statements with an actual vote. so i'll repeat what i said yesterday to my democratic friends. if i were you, i would take a long look at the cut, cap and balance legislation the house is taking up today and ask yourself the following question: ask yourself are you so committed to the status quo that you'll vote no on a bill to balance the federal budget? i would urge my democratic friends to join us. the american people sent us here to make tough choices. agreeing to balance the budget shouldn't be one of them. this should be an easy one. i would urge my colleagues in the strongest possible terms to join us. it's time to balance the books. madam president, i yield the floor. the presiding officer: the clerk will call the roll. the clerk will call the roll.

quorum call: mr. reid: madam president, today the house will consider legislation that will force the nation to default on our financial obligations for the first time in history unless congress adopts a new -- well, let's put it this way. what the house is working on today would force the nation to default on our financial obligations for the first time in history. they're going to do it with a radical, radical new constitutional amendment.

that amendment would impose arbitrary reckless budget caps, it would force cuts to medicare, social security and other crucial benefits. at the same time it will constitutionally protect wasteful loopholes, give tax breaks for millionaires and billionaires. to meet an arbitrary spending cap at 18% of gross domestic product it would shrink benefits and services back to the levels not seen since 1966. madam president, 1966 medicare was one year old and there were 100 fewer people in this country. in 1966, the country had 200 million. we now have 300 million people. and they would take us back to the levels then. it's obvious it just simply wouldn't work. for those who think rewinding 45 years is a good thing, consider how much america has changed since 1966.

for example, life expectancy is nine years longer today than it was 45 years ago. madam president, one reason it's longer is because of medicare. medicare has made people healthier and live longer and more productive lives. this legislatio -- this legislation would roll back the progress brought about by these programs and would enshrine in this thing they're trying to do in the house today a set of priorities so backward, even advisors to president ronald reagan and george w. bush have called it unwise. in the first decade alone it would mean more than $3,000 a year in cuts each seniors' social security -- it would slash our social security net, decimate medicaid, cut medicare benefits by $2,500 for every senior. this is -- on a year, madam president, every year. in fact, the nonpartisan

congressional budget office says that within 25 years it will slash government benefits and services in half. everyone within the sound of my voice hear what i'm saying. slash benefits in half -- veterans, medicare, medicaid -- 70% of the people on medicaid are people who are in convalue he isence centers. cut those benefits in half. it is obvious that there wouldn't be people in convalescence centers. they would be at home, with family trying to take care of them in their older years. i talk about slashing benefits in half. we're talking about medicare, medicaid, veterans' benefits and every remember government source, no matter how essential. yet it would make it almost impossible to end even the most wasteful tax deduction breaks and -- tax breaks and loopholes

already in place such as the subsidies to oil companies, who are making record profits but getting huge subsidies from the american taxpayers t would allow these benefits to go to the corporations who ship jobs overseas and rich people who buy yachts and private jets. madam president, if i were really rich, i wouldn't buy a yacht. it would be nice to have an airplane, though. this won't stop people from buying airplanes. it will make people -- it'll allow the tax program to treat these rich people like everybody else. it would require a two-thirds majority if the house prevails -- if the house issue prevails it would require a two-thirds majority in both houses of dong raise even penny of new revenue. meanwhile, the so-called cut, cap, and balance does absolutelying in to protect our economy from the kind of recession from which we're now beginning to recover. if the economy wasn't already in recession, experts say this legislation would quickly produce one. bruce bartlett, economic advisor

to president reagan, someone we all knew, fine man and a treasury official under president bush, said that the kind of rapid spending cuts called for in this house legislation would -- quote -- "unquestionably throw the economy into a recession" -- end of quote. this legislation goes beyond the draconian budget republicans passed earlier this year. that budget would have ended medicare as we know it and would have also cut clean energy by 7%, ax education funding, cost hundreds of thousands of private-sector jobs t passed the house t didn't pass here. but what they're trying to do today is even more draconian than the so-called ryan budget, the house-passed budget. what they're trying to do now is worse. it would -- they would attack all the same programs but the cuts would be deeper and deeper and it would slash social security as well, which the house budget didn't have in it. this legislation that they're debating now in the house is so restrictive, republicans' own

budget -- the budget that they passed earlier this year -- wouldn't meet the standards they're now asking to be passed. it's so restrictive, not one year of either george w. bush or ronald reagan administrations would meet its standards. over the last 30 years, the only two years that would make the cut were during the clinton administration. as "the washington post" said -- quote -- "every single republican has endorsed a constitutional peement that would make ronald reagan's fiscal policy unconstitutional. that's how far to the right the modern g.o.p. has swung" -- close quotes. bruce part let, as we talked about him before, said this about the legislation: quote -- "this is quite possibly the stupidest constitutional amendment i think i have ever seen. close quote. "this is quite possibly the stupidest constitutional amendment i think i have ever

seen. it looks like it was descrafted by a couple of interns on the back of a napkin." that is being awfully hard on interns, madam president. bill hogood, bill was on this floor woking with us, a fine man, a close advisor to senator domenici and other republican senators -- i worked here on this floor trying to get bills passed. a fine, fine man, republican first, wanted to get things done for our country second. bill hoagland, budget advisor to republican congressional leaders for quarter of a century described it best when he labeled this legislation a misleading political cheap shot -- a direct quote from bill hoagland. a balanced budget is something we can all get behind. but this no amendment is not abt

that. it is about scoring points. who do you think helped president clinton balance the budget during the only two years of the last 30 that actually lived up to the restrictive rules outlined in this legislation? democrats in congress. today democrats are trying to rein in spending again. they're also trying to avert a catastrophic default on our nation's financial obligations. republicans rlt ones standing in the way of a deal to avert default. madam president, it is just not me. read today's "washington post." and see again what david brooks says. david brooks is a card-carrying republican conservative. read what he has to say. read yesterday the conservative columnist in the same newspaper -- his name is ross delfa. wrote in "the new york times" yesterday "we could already be on the way it a deal if -- quote

-- "more republicans could only recognize that sometimes a well-chosen concession can be the better part of value letter." understand of quote. we're arriving two weeks from today we default on our debt. i have not heard a republican leader -- i have my friend on the floor today from the sister state of arizona. he has always said that there will not be a default on the debt. senator mcconnell has said that. john boehner has said that. leader cantor has said that. we have two weeks to prove that they're right. the presiding officer: under the previous order, the leadership time is reserved. under the previous order, the senate will be in a period of morning business for two hours with senators permitted to speak therein for up to ten minutes each, with the time equally divided and controlled between the two leaders or their designees with the majority and

the republicans controlling alternating 30-minute blocks with the republicans controlling the first block. mr. kyl: madam president? the presiding officer: the senator from arizona. mr. kyl: thank you, madam president. first let me reassure my friend and colleague, the leader of the senate, that it is our view that the debt ceiling will be extended, and leader mcconnell wanted to make that crystal clear in his discussions with leader reid so that the two of them could work together on a plan that the senate could pass, send over to the house to ensure that our debt ceiling would be increased and, thus, assure the markets that they need not be concerned about that fact. as i've said many times, the republicans are not going to be the ones that would throw us into default. yesterday i spoke on the floor about the reason why republicans are opposed to raising taxes.

the president himself last december said that raising taxes in a time of economic downturn would be a mistake, would be the wrong thing to do. and we're still in that economic downturn. in fact things are worse now than they were then. and it's like a doctor treating a patient. when you diagnose what's wrong, you deal with what's wrong, you don't try to fix something else. our problem is spending. it's not taxes. and that's why we need to focus on spending rather than taxes. at the conclusion of my remarks i'm going to ask consent to put an op-ed from "the wall street journal" in the record. it is about -- written by michael boscan, who makes the point very clear that our problem is spending, not taxes, and that we should be focused on reducing spending growth, especially in entitlements. michael boscan is a professor of economics at stanford university at a senior fellow at the hoover institution and chaired the economic council of advisers for the first president bush.

i'll refer to that again in a moment. but yesterday i said there were three reasons why republicans were not willing to raise taxes at this time. the first was that the problem, as i said, is spending; it is not taxes. spending has increased under president obama from 20% of the g.d.p., which is the historic average, to 25% in just three years. that's been the reasons why we've had a deficit of $1.5 trillion each of those years and will see deficits in that order of magnitude out for as far as the eye can see. the second reason not to raise taxes is that when we talk about who the taxes actually apply to, it turns out they don't just plie to millionaires -- apply to millionaires and billionaires. i pointed out that there are 319,000 households that report over $1 million in income taxes.

that's 319,000. but the tax the president is talking about would apply to 3.6 million taxpayers, more than 10 times that amount. so the point is that frequently democrats like to aim at the rich, the so-called millionaires and billionaires, and they end up hitting a whole bunch of other folks who aren't in that category of millionaire and billionaire. it's happened before with the alternative minimum tax that was originally to apply to 125 people, i think, and now applies to somewhere between 20 million and 30 million households. so that's the second reason. and i might add by the way, my friend, the majority leader, said a moment ago that there's nothing wrong with taxing yachts or airplanes. in fact he'd rather even have an airplane than a yacht. remember the experience we had with that. we were going to hit the big millionaires and so in 1990 we raised the tax on yachts and other luxury items.

well, lo and behold, all of the people that made boats up in maine and massachusetts and the other states lost their jobs. i think it was something over 9,000 jobs were lost in the boat-building industry and congress quickly repealed that. within three years we had repealed that big luxury tax. we weren't hitting millionaires and billionaires. we were hitting the people who actually made the yachts. priet after 9/11, congress pass -- right after 9/11, congress passed an accelerated depreciation provision for the commercial aviation -- or the general aviation industry. the idea there was to make sure that 9/11 didn't hit that industry too hard and jobs would be saved. in the president's stimulus bill, that accelerated depreciation provision for commercial jets -- or business jets, rather, was reauthorized. that's the thing we're talking about here when we talk about business jets. the president has said business

jets shouldn't receive that kind of tax treatment. well, the people who he said would be benefited by the stimulus package with jobs created or jobs saved are the people who will lose their jobs if that particular tax treatment is taken away. now, maybe we should look at that. i'm not against looking at that tax treatment. if we should look at it and decide it's not appropriate, maybe people will lose their jobs, but we want to get rid of it. we should use whatever reduction that ness that to create lower rates for corporations across the board, as the president has indicated, because then we can be more competitive with corporations abroad who have much lower corporate tax rates than the united states does. and that gets me to the third reason why we shouldn't raise tax rates: because it'll kill jobs. it'll hurt the economy. if you want to put people back to works you cannot impose more burdens, either regulatory or tax burdens, on the very businesses thralled create the jobs. two-thirds of the jobs coming

out of the recession are small businesses. 50% of the income of small businesses is reported in these top two income tax brackets that would be a h affected by the president's proposals to raise taxes. they would get hit by this and as a result wouldn't hire as many people. just a couple of items from today's paper that illustrates the point. from "the phoenix business journal," "u.s. small businesses out of gas on job creation." they point out that new jobs are not to be found, economic uncertainty is cited as the biggest obstacle to hiring. one of america's more colorful entrepreneurs, steve wynn, the a c.e.o. of resorts in nevada, one of the majority leader's constituents and a supporter of the majority leader and a self-described democrat, says that "this administration is the greatest wet blanket to business and progress and job creation in my lifetime." he goes on to say in his report

to his company shareholders in the company's quarterly conference call that "my customers, the can that happens provide the vitality for the hospitality and restaurant industry in the united states of america, they're frightened of this administration and it makes you slow down and not invest your money." and he goes on. i've talked to mr. wynn. he is very concerned about the regulatory and tax burdens being imposed upon not just his industry, but across the board. that's what's inhibiting economic growth. one of the taxes proposed by the administration was evaluated by this administration's small business administration, the office of advocacy, the s.b.a. they said -- and i'm quoting now -- it could ultimately force many small businesses to close. end of quote. why would the administration propose a tax increase on, in this case retailers and manufacturers primarily that could ultimately force many small businesses to close, according to the

administration's own s.b.a., small business administration? it doesn't make sense. so for all three reasons, we shouldn't be raising taxes. the president was right last december, and the reason is because spending is the problem, not taxes. that we end up aiming at the millionaires and billionaires, but we get a much broader swath of our economy. and, third, because it would kill job creation and inhibit economic growth to enable us to get out of this recession. the final point i'd make here relates to that. it's the "wall street journal" op-ed of january 18 by my category bosskin. let me unanimous consent that at the conclusion of my remarks this editorial be printed. the presiding officer: without objection. mr. kyl: i'll make a couple of points here. let me quote from this e. two

problems arise when tax rates are raised. first, higher marginal tax rates cause real economic harm. the combined marginal rate from all taxes is a vital metric, since it heavily influences incentives in the economy. workers and employers, savers and investors base decisions on after-tax returns. thus, tax rates need to be kept as low as possible on the broadest possible base consistent with the financing necessary government spending. and the second point he makes is that as tax rates rise, the tax base shrinks and ultimately you have a much smaller group of people paying at those very highest levels. he goes on to point out some examples of somebody in the upper brackets in the state of california, which is a high-tax state. when you add in the california taxes, the payroll taxes to fund obamacare, ultimately the president's idea of uncapping social security payroll taxes,

the combined marginal rates would rise to a stunning 58.4%. then if you added in the requirements to pay for the additional costs of the excess spending that the administration has proposed, the taxes could drive the combined marginal rate to more than 70% by 2035, 80% by 2050. there is a point at which people are going to stop working for that next marginal dollar because most it have goes to uncle sam. he also takes the example of a worker in california earning $60,000. the marginal rate goes to 71%. he says at the margin virtually everyone would be working primarily for the government reduceed to a minority partner in their own labor. one of his conclusion, and i'll just quote this and then conclude, higher tax rates are the major reason why european per capita income according to the organization for economic cooperation and development, is about 30% lower than in the united states.

so, madam president, the point here is that imposing more taxes on the economy not only inhibits job creation, but it reduces productiveivity because americans stop working that extra dollar or that extra day in order to earn income since most of what they earn is going to have to be turned around and given to uncle sam. that is partly why the european standard of living is 30% lower than it is in the united states. do we want to get to where europe is? the answer i think is no. we have to deal with extending the debt ceiling. we should try to reduce spending so that we don't have this future cloud hanging over our head. and, frankly, to prevent having to come back to increasing the debt limit every few months or every few years. but the way to do that is not by raising taxes, which will not raise the revenues. it will inhibit economic growth. but rather, by focusing on the

real problem which is spending, which has increased 20% to 25% of g.d.p. in just three years, by focusing on spending, getting spending under control -- and i mentioned yesterday, for example, that the president had taken a lot of things off the table. my friend the majority leader indicated the president is willing to compromise by reducing spending. i don't think he is. i've been sitting in those negotiations. i haven't seen that. we've mentioned three things that wouldn't touch beneficiaries: medicare, medicaid and uninsured benefits going to people who aren't supposed to get them or overpayments. you could save over $100 billion a year by simply not paying people what the law says they shouldn't receive. just stopping the overpayments or paying people that aren't eligible for one of those three services. you're not touching anybody who is currently eligible for

medicaid. you're not touching them. they receive their full benefits. but let's watch out for taxpayer dollars. the problem is it's like renting a used car. has anybody here ever washed a rental car? you rent a karbgs you go home, the first thing do you is you wash it. it gets a little bit dirty. no, this isn't our money and tax people aren't watching t. it is administered by the federal government, medicare, medicaid or unemployed insurance. people aren't trying to stop the waste, fraud and abuse. we don't want to receive the benefits to have to sacrifice. the taxpayers are the ones sacrificing by contributing money to the government that's then wasted. there is plenty of reform out there to stop wasteful washington spending. if the administration would be

willing to do those things, then i think we can find enough savings so we wouldn't have to be talking about tax increases which for the three reasons that i mentioned are so harmful to our society, to our families, to our businesses and to our economy. madam president, i hope that as we continue this debate, my colleague's debate, the cut, cap and balance legislation, that does require cutting, spending, constraining it over time and ensuring that over the long term, over the next 5, 10, 15, 20 years that these savings don't all evaporate that we go back to our big spending ways. at least a balanced budget amendment would fully support us. i presume it will pass the house of representatives this evening and am looking forward to the debate here in the senate so we can try to adopt that same legislation. madam president, i observe the absence of a quorum. the presiding officer: the clerk will call the roll.

quorum call:

mrs. murray: i ask unanimous consent that the quorum call be lifted. the presiding officer: without objection. mrs. murray: madam president, there is no question that we need to make smart decisions to tighten our belt and reduce or nation's deficit and debt. american families have done it and we owe it to them to get our fiscal house in order. but there's also one group of americans that we owe an even greater promise to, a group who we can never allow to become pawns or fall through the cracks or be forgotten altogether in these budget debates, and that is our men and women in inn form and the veteran -- in uniform

and the verptses who have protected our nation for decades and that's why i'm here on the floor. in the midst of thewhile wind -- in the midst of the whirlwind debate on deficit and debt, no matter how divided we may be over approaches to cutting our debt and deficit, no heated how heated the rhetoric et goes, we have to keep our commitments to our veterans and service members and we have to move this bill forward. and we have to provide for those who wore or are wearing the uniform with the peace of mind that we are keeping our promise to them. now, madam president, a couple of years ago we took a proactive step to make sure that the nonstop wrangling over appropriations bills here in congress didn't interfere with the health care that our veterans have earned. thanks to the work of senator akaka and many others, the v.a. spending for health care is now appropriated a year in advance.

protecting it from an imperfect budget process that is so often affected by politics. but i remember when we passed advanced appropriations we were very clear -- our foresight was not going to be an excuse to sit on our hands when v.a. funding was up for consideration. we were not going to allow a precautionary measure to get in the way of passing timely increases in veterans' health care, and so this bill is the test. can we put politics aside for the good of our nation's veterans and service members? can we show that that despite our differs we will work as diligently toward getting them the benefits and care they have earned as they have, wooed for our nation? i hope wefnlg i say that because the investments in this bill are a lot more than numbers on a page. they are life-changing programs for veterans with posttraumatic stress disorder and brain injury.

it is support for suicide hot lines that are seeing more callers than ever before. it is providing roofs over the heads of ash service members and their families. it is timely investments for the very biggest priorities of our nation's heroes. and so today i want to talk about just a few of the investments that are included in the bill that we're considering today and how they translate into the lives of our service members, our veterans and critically their families. madam president, this is an influx of young veterans coming into the v.a. system right now like we have not seen in a very long time. in fact, the v.a. estimates that the number of iraq and afghanistan veterans in its health care system will reach well over half a million at some point next year. that is this aisn' this a 100% e 2008. this is a big challenge and one that we have no choice but to step up to meet if we're going to avoid some of the same

mistakes we saw with the vietnam generation. that's why this bill includes nearly $3 billion to meet the health care needs of veterans who served in iraq and afghanistan, which is a nearly $600 million increase over last year. but it is more than just the sheer number of new veterans that will be coming home to the v.a. in the near near future. it is the extent of their wounds, both visible and invisible, that will require an untold resource from our nation. you know, through the wonders of modern medicine service members who would have been lost in previous conflicts are coming home to live productive and fulfilling lives. but they will need a lifetime of care from the v.a. and that's why part of this bill includes significant investments for research in a number of areas, including traumatic brain injury, spinal cord injury, polytrauma injuries, and sensory loss. it includes funding that will go to maintaining world-class

prosthetics like the one that was worn by sergeant leo petry who i saw at the white house last week shake the hand of a grateful president obama as he was award the medal of honor. it is also funding that comes hat a critical time as amputations have sharply increased among soldiers in afghanistan, many of whom are getting out of protective mrap and humvees to engage afghan citizens and ping themselves at far greater risk of severe i.e.d. injuries. according to a recent "washington post" article, twice as many -- twice as many u.s. soldiers wounded in battle last year required limb apew facings than in either of the -- amputations than in two of the previous years. this comes as fund funding for mental health concerns continues to rise.

in april, the v.a.'s suicide hotline took 14,000 suicide calls, more than they have taken in any month in the previous four years. so, madam president, this bill makes sure we're putting someone on the other end of that call. this bill funds efforts to give ventvents access to mental healh professionals and ensures we're not leafing our veterans to go it alone. this will do much more than help our knewest generation of veterans. for generations we have faced the problems of homelessness among or nation's veterans without making any real headway. recently through the success of programs like h.u.d.vash we are seeing real progress into putting veterans into safe and secure housing. and the goals laid out by the obama administration to end veterans' hemlessness once and for all. so this bill includes nearly $1

billion in direct assistance to homeless veterans and this bill helps those who have taken on the monumental but deeply personal task of providing care to an injured veteran in their family. those people who have left behind their own careers and personal lives and even her to hain health care and benefits -- and even their own health care and benefits to take care of those who can't take care of themselves. it includes benefits to take care of women veterans who through health care and construction upgrade that improve privacy will benefit from v.a. facilities that are more conducive to their needs. this bill also includes major investments to fund military construction projects worldwide including readiness centers, barracks, hospitals clinics and schools. it also supports family housing construction projects that ensure military families have a satisfactory roof over their heads and that, by the way, will create thousands of good-paying

jobs. as we all know, the strength of our military is rooted in the strength of the families that support them. investments like these are what allows our service members to go abroad, knowing that their loved ones are being looked at by the nation that they are protecting. madam president, after nearly a decade at war, the consequences of send our service members into combat and the sacred obligation we have to care for those injured in verifies become clear. but so have the shortcomings and challenges we have to made. last week i chaired a hearing on the gaps to mental health care that still exist at the v.a. and the stories we heard were deeply frustrating. i heard the stories of two separate veterans who attempted suicide but were still left to wait for weeks and even months for appointments into the v.a. we have to fix the way the v.a.

meets that obligation, so that they're more flexible and responsive to the needs of today's veterans and we have to do in a cost-effective way by making sure we're getting the most value out of every dollar that a bill like this one provides. next week in our committee i will be examining the long-term costs of the wars in iraq and afghanistan to our newest generation of veterans because i believe we need to address this problem openly and honestly. madam president, like generations of service members and veterans before them, today's heroes have done everything that has been asked of them. they've been separated from their families through repeat deployments, they have sacrificed life and limb in combat, and they've done all this selflessly and with honor to our country. we cannot allow our commitment to them to lapse or to get caught up in politics. that's why we need to pass this bill. and we must also come to a budget agreement that avoids

default and the consequences that would have on our veterans. we have to keep our promise no matter what. thank you, madam president. i yield the floor. mr. schumer: madam president? the presiding officer: the senator from new york. mr. schumer: first, want to thank my colleague from the great state of washington for her remarks and never-ending strong and successful defense of our veterans who have done so much fours. so i want to salute my colleague from washington state. i want to talk on two topics. first on abuy woman bark the pride of rochester and the u.s. women's soccer team and on the cut, bap, and unbalance plan that is now being debated in the house and will soon debated in the senate. first, madam president, i rise to recognize the extraordinary efforts of the u.s. women's

national soccer team in this year's world cup and in particular new york's own abby wombach. over the last month the women's national team has taken this country on the ride of a lifetime. from their nail biting effort to qualify for the world's cup to their heroic comeback in the quarterfinals, this team showed the best of america during this world cup. at eesm stage there was a driving force, a player who learned the game from her older brothers on the soccer fields of new york's greater rochester region, a player named abby wombach. hundreds of rochester's fans gathered at her brother' brotheo cheer on abby. in the past few years and especially the past month or so, abby has become a household name. fans from rochester, the state of new york and across the country watched in awe of abby

as she led the u.s. squad throughout the world cup. in row chester and the surrounding area, abby has been a star ever since she played on the varsity team as an eighth grader. unusually young to be playing on a varsity jawed, she helped her team achieve a section five title and as is clear to all of us that have watched her over the years, her success has tintsdz ever since from our lady of mercy to the olympic games in athens and 2011 world cup, abby has been an incredible player and leader at every turn. abby wambach has always represented the best that shiewrk has to offer and given young women across the country someone to look up to and the last month of the world cup action has only cemented her legacy as one of the greatest u.s. women's soccer players of all time. she scored over 120 international goals, none more

dramatic or meaningful than her goal against brazil in the quart finals. no matter the odds or the scwoar, americans will never give up and always believe and abby and her teammates showed that same drive and desire in the game against brazil. abby and the u.s. soccer team created a moment that will live long in the sport's lure of our nation. as the buzz continues about her goal, there are some people close to abby who probably weren't surprised. for those who watched abby during her sophomore goal score two goals and make a clutch penalty kick, they know that this is just what abby does. for months abby has been a long way from home but tomorrow she'll get the warm rochester welcome she comes to know when her magic jack club faces the western new york flash. of course we all know that the efforts of the u.s. women's team

came just short in the end, and we can't help but be happy for the japanese team and the entire country as they finally have something to celebrate after the challenging montsdzs they've been through. so japan may have won this round and congratulations to them, but they should know, the u.s. women's soccer team will see nem in london for the olympics next summer and again for the world cup in 2015 with the pride of rochester, abby wambach leading the way. and now to perhaps a less happy subject, the so-called cut, cap, and balance plan. well, let me just say that we're going to be debating this in the house and in the senate over the next week. theater trumps serious solutions as the house republicans plan a vote on their unrealistic cap c,

cap, and balance proposal. it is seriously trumping serious solutions when you put something on the floor that may not pass your own body, certainly won't pass th the senate and will be vetoed by the president. let's stop playing games and solve this problem once and for all. we on this side call the plan call -- we on this side of the aisle call the plan cut, cap and kill medicare, for one good reason. under the reckless plan, seniors could see their medicare cuts go up by $2,500 beyond ryan's cuts. social security benefits could be slashed by $3,000 a year. it is the ryan plan on certificate roeudz. the ryan -- on steroids. the ryan plan has been seriously

rejected on a bipartisan vote in this body. the american people dislike it intensely. and yet now we've done something that's even more extreme. if you thought it wasn't possible to be more extreme, look at the cut, cap and kill medicare plan that some of our colleagues on the other side of the aisle are offering. and there's three things wrong with their plan, madam president. first, we have a serious debt problem. if the credit of the united states goes into default, we will pay the price for a decade. it will make our deficit worse. it will raise costs to the federal government because interest rates on federal bonds will go up and stay up for a very long time. it will raise the cost to average homeowners because both mortgages and credit card rates will go up. it could very well send our

economy back into a recession. so let's roll up our sleeves, let's compromise, and let's meet in the middle and do something that will both end our deficit problem, reduce our debt, and make sure that we're able to pay the debts that we've already incurred. but, no, theater is the day. you know, madam president, when ideologues don't see the world as it is. i read some of the statements by some of the freshmen colleagues from the republican side in the house. they just don't get it. their view is that they are so right that all they have to do is nut on the floor and all of -- is put this on the floor and all america and every other senator and congressman will go along. ideologues don't seat world as it is and that's why i haven't been too fond of them on the far right or far left. yet that's who's governing here.

read those statements in the paper this morning. all they have to do is put this out there and everyone will see the righteousness of their cause. i have a word for them. slashing medicare, slashing social security is not the right thing to do, and i will never see things that way. saying that millionaires should continue to get tax breaks while we're slashing social security and killing medicare is something i will never go along with, nor will a single colleague on my side of the aisle. so it is not going to pass. it is theater and politics at its worst. it is ideologues governing or trying to govern. they're not able to govern because they don't see the grays in the world. it is only black or white.

the plan has three strikes against it. one it won't solve the problem and it is political theater. two, it will kill medicare as we know it. that's why we call it cut, cap and kill medicare. and, three, it will not do a thing to help the middle class while giving huge tax breaks to millionaires and corporate america. that is not the plan america wants. that is not the plan america needs. that is not the plan that will pass. and so, you know, i understand that many of us have to bow to an extreme base in a party. and that happens around here a lot. but not when we're two weeks away from defaulting on our debt. not when we're two weeks away from potentially walking off 0 the cliff and incur injuries

that we'll never recroup rate from. i call on -- recuperate from. i call on my colleagues on the other side of the aisle to stop the theater, to stop throwing red meat to the hard right base and join us in really sofrlg the problems of -- in really solving the problems of america. i yield the floor. i yield the floor. a senator: stph-pt. the presiding officer: the senator from nebraska. mr. johanns: madam president, i ask unanimous consent that i be permitted to enter into a colloquy with my republican colleagues for up to 30 minutes. senator alexander of tennessee, senator hoeven of north dakota, and senator risch of idaho will participate with me in this colloquy. the presiding officer: without objection. january january i would like -- mr. johanns: i would like

today to speak to an issue that i believe has all the potential in the world to define the future this have great country, and it's an issue that all of us who are participating in this colloquy are very familiar with, and that is a balanced budget. all of us are former governors of the states where we come from. in my state, the state of nebraska, our nebraska constitution requires a balanced budget, not a mutual. i believe 49 out of 50 states have this requirement in their constitution. it's not theater. it's the way we do business at the state level. in addition to that provision, however, our state constitution also says that the total amount of money that the state of nebraska can borrow is $100,000. $100,000.

so what does that mean? we must balance the budget on 0 an annual basis, and we can't go out to the debt market and burden our children and grandchildren by fulfilling promises that, kwaoet honestly, we have no idea how we'd pay for it. we can't do that. does that sound familiar? that's what the federal government does every single year, and the federal government has been doing it for decades and decades. you see, in nebraska, madam president, we are forced to prioritize and live within our means. we have a very simple straightforward philosophy. we don't promise something that we can't pay for and we don't buy something that we can't pay for. now, is that unusual? is that radical? every working family in america understands that, and they live by that simple concept.

the simple concept that you shouldn't be buying things that you can't pay for. if you do, it gets you in trouble. sadly, the federal government just doesn't think that applies -- thinks it's kind of a rational notion to apply that to what happens here in washington. let's look at the results of this kind of policy in my state of nebraska. the unemployment rate in nebraska today is 4.1%. 4.1%. during one of the most difficult times since the great depression, the unemployment rate in nebraska never exceeded 5%. as i said before ongoing this floor -- as i said before on this floor, let me state that a different way. that means that about 96% of

nebraskaans have worked. you see, our state believes in the philosophy of less government. i've said many times government doesn't create the jobs. the private sector creates the jobs. it's small businesses and businesses willing to take the risk that will get us out of the tough times we are in now. when i was governor, nebraska went through some very difficult times. i was governor on 9/11. i was governor when dot-com bubble burst. well, i didn't have the option of walking into my state of the state address and standing there and saying, gee, folks, this is tough times. we're kind of divided out here. we won't be passing the budget. had i said that, i would have been looking for another state to live in. i would have been laughed out of

the governor's office. there were no easy but there were necessary and important decisions to be made. nebraska pragmatism would go a long way here in washington, but you know what? my state is not unique. my state is not in terms of this balanced budget requirement. in fact, i have other governors with me today. i'd like to start out by recognizing senator le march alexander -- senator lamar alexander of the state of tennessee. senator alexander, when you became governor, i know that you had a lot of priorities but you created an environment in which job creators could thrive. you created that environment with the spending requirements of your constitution. i would like you to tell us how you did it.

i took your state -- how you took your state forward even though you had to balance your budget? mr. alexander: thank you. it is terrific to be on the floor with other former governors. even when we voted on the health car bill, let me try to answer your question briefly so we can mare from the -- so we can hear from the other governors. i became governor 30 years ago, in the early 1980's. inflation was 20%. hard to imagine in the early days with the reagan administration they had driven up interest rates to 12% to try to bring inflation down, so we had terrible times. and of course we still had to balance our budget. we had to live within our means. we had to have the amount of money coming in equal to the amount coming out. let me tell one story of the difference that's made in our state and how it could make in

the federal government. the other day in the environmental and public works committee the tennessee chief highway engineer was testifying. he was there when i was governor. he's still there. one of the senators, the chairman suggested that perhaps some flexible financial planning would be a good idea. in other words loaning money for the state of tennessee to borrow roads. it was said we don't want to borrow money. the state of tennessee has zero road debt that. about brought the hearing to a halt because several senators had never heard of such a thing. we have zero road debt. we use all of our gas tax money to pay roads. that means when we have a tough time like whaoe did when i became governor, when you were

governor, as we do in the country today, if our interest rates are low or we way know interest we can use that money to get through tough times. a lot of the businesses and families today that have less debt are making their way through these tough times more easily. on the other hand, the federal government, according to the president's budget, by the year 2020 would be spending more money on interest on the federal debt than it would be on our national defense. interest on the federal debt would be $931 billion by 2021. what if that money could be put back in our pockets through tax cuts or used to send a kid to college? one way i would say to the senator that balancing the budget helps create jobs is if you keep your interest payments down, you keep your taxes down

and you can spend your money wisely on things that count. mr. johanns: senator alexander, you raise such a valid point. in the state of nebraska, we don't have any road debt either. if we wanted to pave a mile of highway, we had to have the money in the bank or it did not get down. the other advantage of that is when the economy started to lift, you didn't have to pay back all that money that you had borrowed. you were ready to take off. and so i would just have to imagine in tennessee, like nebraska, our economic recovery was easier to achieve. i had the pleasure of serving as governor of nebraska when senator hoagland was governor of north tkafpblgt the state of north dakota is most often

recognized as one of the best managed states in the country, runs a surplus with some of the lowest unemployment rates of any state in the country. yet, you suffered through some of the same problems we had after the dot-com collapsed. senator hoeven, could you talk to us a little bit about how the balanced budget provisions in your constitution required you and the legislators to manage the state. h.o.v. thank you, senator johanns. it is an honor to be here and also with the good senator from tennessee, lamar alexander, great to be here with you, as well as senator ar risch from idaho. it is wonderful to draw on our common experience. i also have to mention that the presiding officer in the senate today, senator shaheen, is a former governor as well, and so we have that common shared

experience, actually here on both sides of the aisle. and it is an honor and a pleasure to be here with you and talk about this matter that is so very important, particularly as we face the need to do something on the debt ceiling. this issue of dealing with a balanced budget is of paramount importance for our entire country, and your lead-in is exactly right. we served together as governors. as a matter of fact, the truth is i would call you because you were elected governor before i was for advice and ask you about some of the things that you were working on in nebraska and our states share many things in common. one you mentioned, a low unemployment rate. the unemployment rate in our state is 3.3%. i contribute that to building a pro-growth, pro-jobs environment that stimulates private investment, stimulates job creation. as you mentioned so very

accurately, jobs are created by the private sector, not by government. so you have got to create that environment that stimulates and encourages and helps, you know, create a forum for that private investment. that's how we create jobs and get this economy growing. on the one side we have got to have a growing economy, which we don't have at the national level right now, and on the other side is we have got to live within our means. we have got to control our spending. and the federal government has a responsibility to control its spending just like the states do, just like businesses do, like families. look, we have got to not only balance this budget, we have got to live within our means on an ongoing basis. 49 of the 50 states have hereto a constitutional or a statutory requirement that they balance their budget every year. sever single governor here with us that i had to balance their budget every single year. it was recently reported that 46

states are already on track to make sure that their budget is on balance by the end of the fiscal year. the federal government needs to do the same thing. look at our situation right now. the federal government takes in $2.2 trillion in revenues. we take in $2.2 trillion in revenues, but we spend $3.7 trillion. that's a $1.5-plus trillion deficit every year, and that's rolling up to a debt that is now closing in on $14.5 trillion. we've got to address this -- this is not something we can hand off to future generations. and so our messages -- our message to the administration is, you're making it worse. we have got to start living within our means. we can't keep spending and then borrowing and then raising taxes

and expect to have an economy that grows and a government that lives within its means, and that's exactly why we're here today talking about the need for this balanced budget amendment. and if you think about it, if you think about it, the balanced budget amendment gets everyone involved, both now and for the future, because it has to be passed by both houses of congress with a two-thirds majority. that has to be done on a bment basis. and then it goes out to the states. and three family farm fourths of the states have to ratify it for it to become part of the constitution. that et goes everybody involved in doing exactly -- that gets everybody involved in doing exactly what we need to do and that's getting on top of this deficit and this debt. both now and for the future generations. again, i want to thank the good senator from nebraska for holding this colloquy and for inviting me to be part of it with my fellow governors. i appreciate it very much. thank you.

mr. johanns: well, let me thank senator hoeven. i notice we are joined by another former governor. this former governor is part of the class -- we were both collected to the senate at the same time, so we're both part of the same class. but senator rirks at one point in -- but senator risch, at one point in your career, you served as governor of the state of idaho. you had financial restrictions just like we did in terms of a balanced budget. how were you able to deal with important priorities while balancing the budget and bringing your legislative process along in accomplishing that? could you talk us to a little bit about that today. mr. risch: thank you very much. i am honored to be here with the other former governors. we -- there are a handful of us

on each side who have had the honor and privilege of serving their states as the chief executive, and so it is a real honor to be heemplet and i bring that experience with me and i think every one of us brings that experience with us. i not only bring that experience but i did almost three decades in the idaho state senate balancing a budget, and indeed i was in the leadership having to do what the leadership does here in bringing the two sides together because we have a budget requirement in the state of idaho, just as virtually every other state does. and does that create some angst when you're the chief executive or when you are a he in the legislative process trying to balance? of course it z i'm sure that the presiding officer wound up with the same thing in her great state as she tried to balance the budget because no matter how much money you have, it is never enough. as you've pointed out, senator

johanns, that it is a matter of priority. this is not rocket science. what the states do -- and i deed what business dozen, and indeed what families do around the kitchen table, either formaally or informally, they anticipate how much money is going to come in over the year, sometimes over the month, sometimes over the week. they anticipate how much money is going to comement in and then they say, well, we have priorities. what is our first priority? well, of course, in a home, you've got to be able to eat, you've got to have utilities paid and a roof over your head. those become very important to. a government, obviously, if it is a state government, education is the largest expenditure for virtually every state. for the federal government obviously the highest priority is national defense. but you make a list. and then what you do is you allocate the money you have to that list. now, when you're done, nobody

ever, ever stands up and says, boy, that went really well. we have enough money. we've got everything funded, we're able to do everything we want to. not absolutely not. indeed -- indeed and here in this city this government is spending $3.8 trillion and i can tell you there isn't a day goes by where we don't get hit up with somebody saying, you know, it's not enough. our agency does not have enough money. why, we can't even -- blank -- fill if whatever you want, whatever agency it is. everybody tells you they don't have enough money. and, yes, that's right, because a balanced budget requirement acknowledges a plain, simple fact of life and that is there are not enough resources to do everything that you want to do. indiana deed, a lot of times there -- indeed, a loflt times there isn't enough money to do what you want tovmentd you have to do the best you can with what of. without a balanced budget

amendment it becomes just the opposite of that. you just keep spending. people say to me, jim, you have been in public service all your adult life. has anything in washington, d.c., surprised you? and i say, yes. but only one thing. the stuff that goes on here doesn't surprise me at all except the cavalier attitude that this city has -- and indeed this institution has -- for the value of money. it just astounds me that in this institution they don't stop spending money when they hit the end of the budget or think don't stop spending money when they hit the end of the resources. they stop spending money when they run out of time. that seems to be the only sid sideboard on how much money is spending. well, if you look around and people will criticize on this and say, oh, you foolish republicans, what are you talking about, balanced budget amendment? why, that's really dumb. you know what i say to them? look at the states. look around at the states.

now, there are two, maybe three states that are having very, very difficult financial situations and it is because they either don't have a balanced budget amendment or they've done some skulduggery to get around the balanced budget department. every other state has their financial house in order. has it been painful? of course it's been painful. it's painful to everyone when they don't have enough money, including american families. but that's simply the way it is. well, one of the problems we're having here is the basic foundation of the difference between republicans and democrats. people who say there's no difference between republicans and democrats ought to come here and spend a day here. they would find that philosophically we are hard-wired very differently, like two brands of computers trying to talk to each other. we are hard-wired differently.

republicans believe that this nation was founded with the idea that you would have a limited central government. it was founded by people who indeed feared a central government, who by the way their fear, as we see every day now, is very well-founded. well be in a limited government. welwe believe in individual responsibility. we believe in the responsibility of the states. it is hard to find people in this thun town that actually bee in sovereignty. that it was the states that founded the federal government and kept the leash on it. the courts have expanded that dramatically. nevertheless, the vision that the founding fathers had that the american people had when they put together the country that created the most successful, the wealthiest, the culture that enjoyed the best quality of life that anyone on the face of this planet has ever

enjoyed before, this -- the founding fathers said, look, we're going to create a government for the individual to give the individual the ability to prosper, to give the individual opportunity. that's what they said. they didn't sit around the table and say, you know what? we need a nanny state. we need to create a government that's going to take care of every american from the time they're born until the time they die, just like in europe. in europe, the government pays for your birth. in yiewrntion the government pays for your funeral and indeed it pays for a whole lot in between there, including every dime you spend after you retire. that was not what america was founded to do. he had did not sit around and say, how can we take care of the whole society? they said, how can we defend this country, make sure no enemies come into this country, make sure people have the opportunity to succeed? yes, some will fail. yes, some will succeed.

yes, we're going to have poor people. and yes we're going to have rich people because that's what a free society is all about. but everybody is going to have the same opportunity. everybody that's born in this country or becomes a naturalized citizen in this country is going to have the opportunity to succeed in a greater fashion than anyone on the face of this planet has ever succeeded before, and they're going to do it without government interference. my goodness, how far we have come from those days and not in a good way. they couldn't conceive that they need add balanced budget amendment because the numbers we're talking about they'd never heard of. the guys signature around the table, if you said, by the way, the country is going to be over $1 trillion in debt some days, they'd say, what's $1 trillion anyway? so they didn't put that in the constitution. so this isn't difficult to do.

it's how much comes in and how much comes out and they need to equalize each other. i'll be the first to admit that our two parties don't understand each other. as i said, we're hard-wired differently and i have a lot of good friends on other side of the aisle. we have good conversations. they don't understand how i can possibly think that we could have a balanced budget. and i guess i don't understand how they think this we can spend ourselves into process is parity. we are indeed hard-wired differently than each other. but i watched one of the leaders the other day colt out here on the floor -- come out here on the floored and he was caring on about how bad the balanced budget was. he said it would be an admission of the failure of this institution to be able to do its job. it would be abdicating our ability to do our job. well, look around. we are $14.3 trillion in defnl .

you think the american people think we're doing our job when we're at $14.3 trillion in debt? and now debating adding another $2.4 trillion to do that? if you come here and you spend a little bit of time here, you will understand that this institution cannot budget and do so responsibly. given the opportunity, it will spend and spend and spend and the only way this can be changed is if we have a balanced budget provision in the united states constitution just like virtually every state in america has. we're going upside-down at the rate of $4 billion to $a billion a day. we're borrowing new money. that's $4 billion to $5 billion a day. that's about four hours for the state of idaho. this can't go on and the only way to fix it is with a balanced budget amendment requirement that, yes, puts a new rule in place, and you need rules, you

need sideboards when it comes to spending money. i want to thank you, senator, for providing us with this opportunity, those of us who've actually lived in the real world where you couldn't print money, you couldn't borrow the kind of money that you're talking about here, where you had to make responsible decisions. and it's time that this government did that. and the only way it's going to do that, regardless of the flowery speeches that are given during campaigns of, oh, send notice washington, i'll take care of this, i'll see that they balance their budget, i won't overspend, they come here and they do it. the only way this can be done is to balance the budget. now, we -- we can't -- to have a balanced budget amendment to the constitution. we can't do this. the american people have to do this. we can vote to ask the american people, do you think we should have a balanced budget amendment to the united states constitution? well, let's find out. let's find out. there can't be anything wrong with giving the american people the ability to do it. it takes three-fourths of the states to ratify this. let's give them the opportunity. let's have the debate. let's pass this and give it to the states and see if -- see if

they do that. thank you very much, senator. i appreciate opportunity to participate. a senator: let me wrap up this colloquy this morning by thanking my colleagues, each one of them, for their comments. mr. johanns: governors are practical people. we have to be. we have no choice. if jobs are going to be created in our states, we must lead that effort. not by jaw boning and indicting the business community but by creating the atmosphere that creates those jobs. if we are going to have a balanced budget, we must lead that effort at the state level. and every governor that has had an opportunity to speak this morning in this colloquy has made that point. at the end of the day, when our legislative sessions were over, we had to be able to tell the people of our great states we

passed a budget, that the budget was, in fact, balanced, and for some of us, that we did not borrow any money whatsoever to get that job done. we could learn something in washington from that. this is not a radical idea. all of the rhetoric that we have heard about what a radical, crazy idea this is, well, how could it be so radical if 49 out of 50 states have decided that this is the right course and the right direction for their state government? i can't imagine that the american people want anything less of their federal governme government, and as senator risch has just pointed out, why would we not give the american people the opportunity to cast their vote on how best to manage their government, their government?

with that, mr. president, i yield the floor and i notice the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

mr. reed: mr. president? the presiding officer: the senator from rhode island. mr. reed: mr. president, i would ask to dispense with the calling of the quorum. the presiding officer: without objection. mr. reed: mr. president, i would also ask unanimous consent that aaron hernandez of my staff be granted the privileges of the floor for the remainder of this week. the presiding officer: without objection. mr. reed: thank you, mr. president. mr. president, i rise today to talk about the regrettable and

avoidable looming debt crisis. avoidable if we take appropriate and timely steps beginning today and continuing over the next few days, as we continue to work to get our economy out from under a protracted and painful recession and on a more robust path of growth and job creation, not having an agreement to pay our country's bills has severe consequences. defaulting could mean not only a potential stoppage of social security and veterans benefits checks, but even more worrying than what happens to the bondholders and the middle class is the question of whether this could push us back into not only a severe recession but a worldwide economic catastrophe. we look across at european governments that are struggling with sovereign debt crises and i think one of the lessons that we should have learned from the events of 2008 and particularly

that fall is that a lack of confidence and a vulnerability in one part of the global financial system can be magnified dramatically because of connections and interrelationships and producing a worldwide crisis. so this is an issue that we have to address. a failure to act would cripple our government almost immediately. in august, if there's not a solution, it is estimated that spending in the economy could contract immediately from anywhere to 40% to 50%, and that means that the u.s. economy would be hit with a loss of about $134 billion or about 10% of g.d.p. for the month of august. and a 10% loss to august's g.d.p. would bring our credit markets to a standstill and could lead to the loss of additional jobs. one of the ironies of this debate is that the proposal by some on the other side to simply

not pass a credit limit legislation would be tolerable. in fact, it would be catastrophic. catastrophic in terms of the very objective that they're urging, controlling the deficit. as people drop out of the labor force, they require more benefits, they are not able legally or in position to pay the taxes they're paying as they work. and in addition to that, it's been estimated that for every 1% increase in interest rates -- and if we default, interest rates will go up on our treasuries -- we will over 10 years accumulate $1.3 trillion in additional deficit. so in one fell swoop, the deficit hawks who are screaming so loudly today could put us on an even worse deficit trajectory. we know the job of bringing this

budget into alignment is not going to be an easy one. it involves many tradeoffs, some of which are likely to be very unpopular. along with my colleagues who served here in the 1990's under president clinton, we took some tough votes. there was not one very muc repun vote in support of us in 1993 and 1994 when we began the process of balancing the budget. it takes time. it takes difficult votes. it was done in the 1990's, and as we all know, when president george w. bush assumes office, we were looking not at massive deficits, we were looking at a potential service of -- surplus of trillions of dollars over a ten-year period. but with the programs that he, again, together with his republican colleagues embraced of significant tax cuts, of expansion of entitlements, part-d medicare that was not paid for, that was put on the credit card, literally, and two

unfunded wars, we are sitting today with this huge deficit. frankly, this proposal to raise the debt limit is very simply paying for what president bush and republican congresses did several years ago, and yet we find my colleagues on this side saying oh, we can't do that. we can't do that without significant, significant reductions in programs that are vital to americans. we have already demonstrated. we did that in the continuing resolution that's covering this year's funding, that we can and will make difficult cuts, we can reduce spending, but we have to do it in a measured way, and the other thing we have to do is recognize that any solution, just as it was in the 1990's, will require revenues as well as expenditures. that is the only way the arithmetic will work. i find it sometimes ironic when i go around and talk, oh, if we

don't solve this problem, you're putting all of this burden on our grandchildren. where was that spirit when the president cut taxes and began to eliminate a surplus that would have benefited our grandchildren? where was that spirit when the president decided to engage in two major wars but not pay for them? where was that spirit when the president decided that he was going to expand entitlements and not pay for them? very few of my colleagues on this side were worrying about grandchildren then. well, we do have to worry about our grandchildren. that means we have to start taking the tough steps today. we have to start making the sacrifices that will get our budget in order. those sacrifices are not simply in cutting programs that are so vital, not only to so many americans but are so vital to our continued economic growth. i am sure, i am sure everyone here will say they have important highway projects in their state.

there are important infrastructure projects in the states. do we sacrifice those projects? if we do, then we sacrifice our economic efficiency, we sacrifice our productivity, and guess what? we give the results to our grandchildren, a decrepit infrastructure, inability to be competitive in a very, very competitive global economy. so we have to, i think, move forward. we have to move forward to avoid a catastrophe to the economy if the debt ceiling is not raised and also move forward to begin to balance our budget in the way it's been done in the past and, frankly, in the way that it only can be done, and that is that we have to start beginning today to make the sacrifices and make the tough choices that will, in fact, provide a better future for our grandchildren. we have done it in the past.

we -- in 1993 and 1994, we took tough steps as i mentioned before to begin to balance the budget. and in 1997, with a republican congress and democratic president, we took additional steps. we can do it and we must do it. now, the idea that we are going to default is, i think, difficult to imagine, but still there are those out there on the other side that are saying they will not vote for raising the credit limit in any way, shape or form. i think that's irresponsible. i think we have to be responsible. we have set up before, we have taken tough votes. we have to do it again. and failing to do that just puts a huge burden on the middle class. the wealthiest amongst us may be able to negotiate through the vagaries of what might happen after a credit default by the

united states, but for social security recipients, for military retirees, for those people who are looking for the basic services of government, transit to get to work, the ability to get on a plane, who is going to be manning the t.s.a. post if the government cannot essentially pay its debts? all these issues have to be considered. now, we have to, as i said, talk about revenues, too. it is astounding that people would literally be suggesting that we cut back social security benefits, we cut back retirement benefits, we do all these things at the same time we're providing about $4 billion in annual tax incentives to the oil industry, when the price of oil is at record levels, their profits are at record levels. these are a host of tax provisions that don't make us any more productive. in fact, one might argue they

don't encourage employment here in the united states even. in fact, one could make the suggestion at least that the way we set up the system, it might indeed encourage employment overseas, and then we patriot rate -- and then repatriate the profits here. well, that might be fine for the big companies and the executives, but what about americans who are looking for jobs? what about americans who are looking just to get by? so we also have to recognize that some of the proposals we have made -- in fact, all of them as the president has talked about with respect to revenues would not be effective immediately because we are still in a period of very anemic economic growth. they would be effective in 2013, but they would go to that long-term goal of deficit reduction, which we can achieve, but it will take time just as it took time in the 1990's.

but even these proposals to close loopholes which are in my view very difficult to defend and to do so not immediately but several years from now, even these proposals are being resisted by republicans. that doesn't make sense to me and i think also doesn't make sense to a growing number of americans across this country. they want us to be responsible. they want us to be able to pay our debts, and then they want us to get our debts under control, and they recognize that that requires not just goodwill and good wishes, it requires real difficult choices and sacrifice. we're seeing now an economy that is racking up huge profits for the industry. the s&p 50 index of financial numbers are sitting on about about $1.1 trillion in cash.

the federal reserve indicated similarly that nonfinancial businesses have about about $1.9 trillion in cash defined as liquid assets. record profits are being accumulated by corporations. all of this is good, but it's much better if those cash resources and profits are put back into the american economy in terms of creating jobs. and that should be part of our effort, too. not simply reducing the deficit. reducing it in a way that we grow jobs here in the united states, and that is i think at the heart also of what the president is talking about in terms of his efforts. we are on the verge of tough votes and tough choices, and i hope we make those tough choices and tough votes. we do have to pay our debts, i believe, but then we have to get our debts under control. we have done it. we did it in the 1990's, and i

would argue without some of the policies that were enthusiastically embraced by many here today that are talking to sacrifice to the middle class but no sacrifice for the very wealthy, we would not be in the same position we are today. so, mr. president, i believe we're at a very, very critical moment. we have to resolve this issue by august 2. i hope we can do that. i hope it will turn on the same kind of sensible, balanced approach that we adopted previously in the 1990's. so we have to go ahead and think in terms of restoring our financial house and then getting our american people back to work, and if we do that, i think we will fulfill not only the best hopes and wishes of the american people but their strong desires. with that, mr. president, i

would request unanimous consent. mr. president, i have eight unanimous consent requests for committees to meet during today's session of the senate. they have the approval of the majority and minority leaders. i ask unanimous consent that these requests be agreed to and that these requests be printed in the record. the presiding officer: without objection, so ordered. mr. reed: mr. president, with that, i note the absence of a quorum. the presiding officer: and the clerk will call the roll. quorum call:

the presiding officer: the senator from illinois. mr. durbin: i ask unanimous consent the quorum call be suspended. the presiding officer: without objection. mr. durbin: mr. president, are we in morning business at this point? the presiding officer: we are. mr. durbin: mr. president, we know as members of the senate that we are facing a deadline of august 2 for the extension of our debt ceiling. the debt ceiling is the authority congress gives to the president to borrow money. now, you say to yourself, well, please, stop borrowing. we're already deep in debt, but what the president is borrowing money to pay for are things that we have already spent, commitments we have already made. let me give you an example. voting to continue the war in afghanistan cost $10 billion a month. we don't have that money, not enough. we have to borrow 40 cents for every dollar we spend.

so when members of congress say continue the war in afghanistan, afghanistan, $10 billion a month, they are saying we're prepared to borrow $4 billion every single month to keep that promise. so the president comes to us about once a year and says i need more authority to continue to borrow money to pay for the things that you have asked us to do. that's what it comes down to. now, nobody likes to vote for the debt ceiling because it is so widely misunderstood. most people basically say i don't want to be associated with it. i have been guilty of that in my political career, but the fact is most of us look over our shoulders at the final vote and say we better pass this darn thing because if we don't, we will default on our debt. the full faith and credit of the united states of america is like our credit score. guess what? we have the best in the world. of all governments in the world, we have the best. aaa. it doesn't get any better, and it's always been there.

and that has helped us. it's helped us not only to borrow money at lower interest costs but the fact that our economy has looked -- is looked on as so reliable attracts more businesses to our country. so if on august 2 we default on our debt for the first time in our history, our credit score is going to suffer. the people who loaned us money are going to say we never dreamed the united states of america would fail to make a debt payment, and if they are going to fail to make a debt payment, then we're going to have to raise the interest rates because they are riskier than we thought they were. what happens when you raise the interest rates on the united states of america borrowing money? every percentage point, every one percentage point adds adds $130 billion a year to our national debt, and over ten years, ten times that amount. $1.3 trillion every ten years forry